2024-06-11 16:43:38 ET
Summary
- Nvidia's stock rally has intensified, driven by investor enthusiasm about the AI boom.
- Competition from AMD and Intel is increasing, posing a potential threat to Nvidia's dominance in the chipmaking industry.
- While Nvidia's growth is impressive, its stock valuations are currently extremely high, raising concerns about sustainability.
A lot has happened since my last coverage of Nvidia's ( NVDA ) stock. The high-tech company's rally has only intensified. By all means, I did not exclude this possibility in my previous analysis. However, I still believe that "this too shall pass". In other words, there is growing competition from AMD ( AMD ) and Intel ( INTL ), even though Nvidia remains the most popular chipmaker. But this may change sooner rather than later. Investors' enthusiasm about Nvidia's success has grown stronger thanks to the AI boom and the recent innovations, and a great set of quarterly results.
Nvidia stock: my previous coverage
In my previous analysis, I wrote that Nvidia Corporation's quarterly and annual earnings were excellent, with revenue and earnings per share seeing substantial growth. Namely, the company's quarterly sales totaled $22.1 billion, a 22% rise from the previous quarter and a surge of 265% from a year ago. GAAP diluted EPS were $4.93, a 33% increase compared to the previous quarter and a surge of 765% from a year ago. Nvidia's growth was due to its data center segment and the rising demand for artificial intelligence processing. I wrote that the stock was a "hold" because of the sky-high valuations, excessive investors' enthusiasm, and key risks, including US-China relations, a likely recession ahead, and also the growing competition. Despite my rather cautious forecast, the stock rallied incredibly, Nvidia reported even better results, and the key risks I mentioned remain the same....
Read the full article on Seeking Alpha
For further details see:
Nvidia: Too Expensive, Competition Is Rising, And Earnings Growth Is Slowing